I Wish You Would Step Back From That Ledge My Friend

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Remember Third Eye Blind*? Remember that Tyson-Hollyfield ear-biting fight? Remember when Leo made his name as a teen idol love-struck boat passenger instead of as a nihilisitc Rhodesian diamond mercenary? Streets full of Explorers and Four-Runners? Better than Ezra coming in 2nd at the Grammys (with you know who in third)?
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Well, we've apparently made no economic progress since then if you believe the S&P, which last traded at 789 in February of 1997 and now trades there today.
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Hell, I couldn't even drive in February 1997!. Chinese Democracy had only one completed track**.
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What does this all mean? Well, it means that either we've destroyed a lot of capital despite ten years of technological progress OR that things were a bit flush back in the late '90s. Or that investors are panicking like a bunch of stampeding sissies (or they are being entirely rational in a recursive sense and acting preemptively before the sissies panic, thus ensuring that panic ensues--the logic gets circular).

So it looks like we're in for it; we're all gonna die:
Fire and brimstone coming down from the skies! Rivers and seas boiling!
Forty years of darkness! Earthquakes, volcanoes...
The dead rising from the grave!
Human sacrifice...dogs and cats living together... mass hysteria!
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You know who I blame for this whole mess? Barack Obama.
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* 3eb to us real fans
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** "IRS" probably

Defending A Rod....... (or, I How I Learned to Stop Worrying and Just Disagree with the New York Post)

Baseball historian and sabermetrician Bill James once noted that throughout baseball history, there have been just as many greats who were branded "bad guys" as there have been who were branded "good guys." We know who they are, the good guys, the universally loved: Babe Ruth*, Willie Mays, Ken Griffey Jr., Cal Ripken Jr., Roberto Clemente, Derek Jeter, Pete Rose (when he played), Nolan Ryan, Honus Wagner.

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There's just as an elite a bunch (if not elite-er) in the category of "bad guys" though: Ty Cobb, Ted Williams, Josh Gibson, Roger Maris, Barry Bonds, Pete Rose (today), Reggie Jackson, Steve Carlton, McGwire/Sosa (today), Manny Ramirez, Roger Clemens, and the most inexplicable member of all, A-Rod.

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I'm sorry I just don't get it. I don't think there's more ill-thought-out cliche than A-Rod as bad guy. Here's the basic rundown of complaints against him, our violet-lipped anti-hero, as far as I can tell:

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1) He isn't clutch, like Jeter; he isn't a real Yankee. Jeter is a much better shortstop, which is why A-Rod selfishly moved to 3B--so he wouldn't get shown up. That's also why he doesn't have a World Series ring, unlike Jeter, who has one for every non-opposed finger on his left hand. I mean, did you read Torre's book? Torre compared him to Jennifer Jason Leigh (unfavorably).

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2) Tom Hicks paid him money he didn't deserve ($25/year for 10 years). Wtf?

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3) He's metrosexual and gets photographed in magazines with his shirt off. a) Remember that time he did it in the SI Swimsuit issue his wife? b) Also-why are his lips purple? c) Why does he hang out with Madonna so much?

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4) He selfish; all he cares about are his own stats.

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5) Something about his personality rubs us the wrong way; why is he so robotic?

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6) He's a steroid user [all new!]; he lied right to Katie Couric's face a year ago when he denied it.

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7) "I'm a Red Sox fan, and I hate all Yankees blindly"

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That's a big list, but it's also a fallacious one. Let me answer each point in succession:

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1) A Rod isn't clutch etc.

A Rod is plenty clutch; by some very important metrics, more so than Jeter

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A-Rod's career OPS (on base plus slugging--a flawed but far better metric than batting average) through 2,042 games : .967

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A Rod's career ALCS OPS (the highest stakes he's ever faced): 1.024. Keep in mind that you face much better pitching in the ALCS than the regular season.

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Jeter's career OPS through 1,985 games (lazy ass has never played 160 games in a season, compared to A-Rod's 5 seasons having done so, hence the fewer games despite the longer career): .845

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Jeter's ALCS and WS OPS: .744 and .809 respectively, with the dropoff probably attributable to better pitching in the postseason.

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Not to mention that A-Rod is a far, far, far superior SS--perhaps the greatest of all time--who unselfishly sacrificed that title so as not to upset the Yankees team balance when he was traded.

As for Torre's book, how does he get still lauded for a Hall of Fame managing career and Jim Bouton (who didn't rely on SI's Tom Verducci for help) is ostracized from the game for Ball Four (one of the great baseball books of all time)?

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2) Tom Hicks should stick to private equity and the Dallas Stars

Tom Hicks made A Rod an offer above sticker price. He's supposed to say no?!

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3) A Rod is kind of effeminate

Okay, this is a bit off-putting. But he's certainly no more metro than Tom Brady or, you know-Jeter himself, who's been known to go out carousing with his friends at the Cheetah Club.

As for the purple lips, isn't insulting those kind of racist in a way? I mean, the guy can't help it. As for Madonna, who wouldn't fall in love with this all-American sweetheart?**

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4) A Rod is a selfish bastard

This is the one that drives me the craziest because BASEBALL IS AN INDIVIDUAL SPORT. Sure, there is a win or a loss at the end of the game for the "team", but you could say the same thing for the Ryder Cup. And guess what? Having good individual stats happens to highly correlate with team performance, especially in the aggregate.

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This idea that A Rod's being a bit narcissistic weighs down the other players on the team when they are, for example, up at bat is retarded. And if it does, maybe the other players on the team should be a bit more narcissistic themselves and focus on the God-damned at bat so they can pad their stats.

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I once asked my Dad, Jeff Pemulis III, who played baseball for Vanderbilt and led the SEC in hitting in 1970, whether he'd rather go 3 for 4 and have the team lose or go 0 for4 and have the team win. He said it wasn't even close, and even went on to say that he always smoldered at the selfishness of the team--celebrating a win when he was in a lugubrious mood from having gone 0 for 4.

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Baseball attracts Ayn Rand-reading individualists. Other sports-football and basketball-truly do rely on team interaction, and, as such, are perhaps fronts for communism.

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5) A Rod is an automaton

I don't know why he's so robotic--probably because he's attacked any time he exhibits a smidgen of personality? Hell, Troy Aikman was a robot, and everyone loves him.

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6) A Rod is a cheater (and I knew it!)

Okay-I'm getting tired, and this is a legit complaint, but I just can't get worked up about steroids anymore. No one cared when the NFL's Sean Merriman tested positive--he was even voted to the Pro Bowl in response! Everyone in this era is on steroids--Pujols is on 'em. I seen it. I saw it up close--my seats are right behind the Astros dugout (1B side) and the year before MLB started testing, he looked like Paul Bunyan. One year later, it looked like he'd shrunk into a pair of oversized pajamas. It's a good thing I'm not a real journalist and don't have to verify this, but I swear it's what I saw. The only non-pitching HOFer of this era who wasn't on 'em was Biggio, and this statement is mere reflection of my bias as an Astros fan (and Biggio's Seacrest-like diminutive frame).

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As for the penulitimate point, have you ever been interviewed by Katie Couric? Just ask our would-be VP; she's kind of an intimidating bitch. I'd lie to her too.

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7) I'm Dan Sarles, 40 year old McCombs alum who goes to Dunkin Donuts every morning and enjoys homemade clam chowder.***

You know, where I come from, we call you people Yankees too.

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--Alright, that's enough contrarian screed for one night.

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*despite everything about him.

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**This video is the best 20 minutes of TV in late night television history.

*** I wouldn't normally write in such a hackneyed NE stereotype, but Dan actually posted some pictures on bookface recently of him at a damned clamming festival. Sometimes stereotypes are just true.

'80s Party

I'm about to head to an '80s party (or more specifically, my sister's 25th birthday party), but my concubine is late. I'm terrified she is going to wear an unflattering "funny" 80s costume, which leads to my next (and only) point.

As you (all) well, know, Mike P. is a huge fan of the decade itself, it's music, it's "culture." But I'm not a big fan of '80s parties. Disco parties area a lot more fun (i.e. girls dress sluttier, with flowing feathered hair instead of the frizzed abominations of the latter decade). Just do an image search for "80s party". You won't like what you see.

Shit--concubine just rang my doorbell. Pemulis out.

Facebook is Hemoraging Cash

The scatological vertigo shown here represents facebook's current business plan according to this piece from PE Week Wire.

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That $15 billion valuation implied by Microsoft's purchase of a 1% stake in Facebook--at a time (2007) when revenues were ~$150 million--looks a little frothy today.

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Never mind that it looked a little frothy back then, as--even if you assumed 100% profit margins , a perfect and instant cash conversion cycle, and a 25% VC/PE-type cost of capital--then you're basically also assuming a 24% compound annual growth rate forever. Look, I'll show you, using the perpetuity equation:

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if 'terminal' value at (t=0) = CF0 / (r-g)

and D/E = 0

then, $15 MMMM = 150 MM / (.25 - .24).

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Point is, that's nearly impossible or at least highly improbable. That implies you double in size every 3 years--and I want to emphasize this again--pretty much forever.

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Let's say you buy a dog (let's call her "Izzy") and invested the 10,000 dollars grandma gave you under the Federal tax exempt gift allowance under these circumstances. Well, by the time Izzy's dead of whatever killed Marley, you're a millionaire. You get a second dog (a puggle named "Deuce"), and by the time it get's hit by a bus in year 13, you're worth 8 figures.

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Pretty good deal, eh? Too good? Yip. Well, that's facebook at $15 B.

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And you know what? All this analysis is crap, because tomorrow I'm going to argue to you how this valuation is justified despite all fallacious evidence to the contrary.

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OK-I'll spoil it here: Facebook is going to start charging subscription fees.